DOHA – International Monetary Fund chief Christine Lagarde warned Sunday that global energy prices could remain low for years and urged Gulf countries to adjust their budgets.
Speaking in Qatar’s capital Doha after meeting ministers and officials from the six-nation Gulf Cooperation Council (GCC), Lagarde warned that the countries could no longer rely on revenues from oil and gas.
“We believe that the price of oil will probably persist at the level where it is for a number of years and as a result all GCC countries should undertake some degree of fiscal adjustment,” she said at a press conference. She said the IMF believed growth across GCC countries would fall from 3.2 percent this year to 2.7 percent in 2016.
Lagarde also said that export revenues would be $275 billion (256 billion euros) lower this year than in 2014 because of low energy prices.
The price of oil has dropped by more than half since the beginning of 2014, with Brent crude, the international benchmark, trading Friday at $47.42 per barrel for December.
Lagarde said adjustments should include “firm control” on spending, particularly on public sector wages, and encouraging private sector growth.
“Well-planned fiscal consolidation strategies need to be put in place as soon as possible and communicated so that people understand how the adjustment will take place,” she said.
She said the “size and urgency of this adjustment” varied for countries across the GCC, which includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.